Adasdas

Andy Kuang

1/8/2015

BBUS 470 Section B

Case 1: Cola Wars Continue: Coke & Pepsi in 2010

1. The rivalry between Coke and Pepsi has tremendously affected industry profit because

of the competition for market share and their pricing strategy that hindered profitability. The

Cola Wars motivated both companies to spend more on advertising, finds ways to elevate in

Innovation and increase the sales volume in the international market. The rivalry weakened

other competitors in the industry because they could not keep up with their plants and

equipment, packaging, and image. During the Cola Wars, these two companies were able to

control the majority of the market share. Coke and Pepsi’s pricing strategy made CSD more

affordable and accessible. The price of one Coke or Pepsi is relatively the same price as bottled

water and juice. The CSD industry’s profitability is extremely high, and the threat of entry is

very small. The duopoly stirred a war that showed these two companies fought to sell their

the lowest reasonable and acceptable price. Companies outside of these two companies knew

that they had minimal effect on prices in the end because the public prefers their brand to

private brands such as Shasta, a coke brand sold at Dollar Tree.

In 1974, Pepsi launched the “Pepsi challenge” in Dallas, Texas. Pepsi used this campaign to offer blind taste tests that allowed local bottlers to demonstrate that consumers preferred Pepsi rather than Coke. The approach to passing this campaign nationwide just triggered Coke and asked for war. Coke’s response to Pepsi challenge was with rebates, retail price cuts and advertisements that questioned the test’s validity. The war does not get any better because Coke was once the king of cola and Coke’s executives never referred to its closest competitor by name and only discussed the growth of their brand. Coke was ahead because Coke won the pouring rights with Burger King, McDonald, and Subway. As of now,...